REPUBLIC OF THE PHILIPPINES

COMMISSION ON AUDIT
REGIONAL OFFICE NO. VIII
LGAS C – Leyte II and Biliran Province
Provincial Satellite Auditing Office (PSAO)
Baybay City, Leyte

Team R8-03, Baybay City

AOM No. 2023-001

Date: August 16, 2023

AUDIT OBSERVATION MEMORANDUM (AOM)

For: HON. ARANTE O. SISCON

Punong Barangay
Barangay Uguis
Mahaplag, Leyte

Attention: Ritchel S. Rallos

Barangay Treasurer

Rodulfo S. Loreto
Municipal Accountant

We have audited some of the Barangay transactions for Calendar Years 2019,
2020 and 2021 and 2022 and observed the following deficiencies:

Property, Plant and Equipment

1. The accuracy, existence and valuation of all properties of the barangay under
Property, Plant and Equipment (PPE) amounting to ₱3,926,844.76 as of
December 31, 2022, continued to be unconfirmed due to a) non-conduct of
physical count of its properties for the past 10 years; b) not detailed PPE
Ledger Cards; c) non-maintenance of Property Cards by the Designated
Property Custodian, contrary to Item 7.2.5, Chapter VII of Manual on the
Financial Management of Barangays and other pertinent COA rules and
regulations.

1.1. Chapter 7 of the Manual on the Financial Management of Barangays prescribes

the specific Policies and Procedures on Investment Property, Property, Plant and
Equipment, and Biological Asset. Items 7.1.18 and 7.1.19 of the Manual provides
that:

AOM No. 2023-001 Brgy. Uguis, Mahaplag, Leyte Page 1 of 18

 xxx

Property, Plant and Equipment/Infrastructure Assets

7.1.18 The barangay shall conduct an annual physical inventory of

all supplies, property and equipment of the barangay.

7.1.19 Report on the results of physical inventory of property/equipment

shall be reconciled with the accounting records.

7.1.7 Property/Equipment Ledger Card (PELC) shall be maintained by

the C/M Accountant as subsidiary ledgers for all property and
equipment of the barangay.

1.2. Likewise, Item 2.1.6 of COA Circular No. 2010-001 requires the Accountants to
submit subsidiary schedules of general ledger accounts, on or before February 14
of each year.

1.3. The Statement of Financial Position for CY 2022 of Barangay Uguis reflected a
total amount of ₱3,926,844.76 properties under Property, Plant and Equipment
(PPE) account. The details are shown in Table 1.

Table 1. Property, Plant and Equipment

PPE Amount
Land 777,469.00
Land Improvement 1,461,643.79
Power Supply System 223,452.47
Office Building 232,810.00
Other Structure 760,711.00
Furniture and Fixtures 52,040.00
I.T Equipment 48,000.00
Communication Equipment 46,295.00
Disaster Response and Rescue Equipment 40,000.00
Sports Equipment 42,400.00
Water Supply System 175,561.00
Other Property Plant and Equipment 66,462.50
TOTAL ₱3,926,844.76

1.4. However, an inventory report has not been provided to the Audit Team, and the
Barangay has consistently failed to submit one over the last decade.
Consequently, the accuracy of all the listed Barangay properties in Table 1
remains uncertain.

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1.5. The Audit Team was not able to confirm the recorded PPE because, though the
Municipal Accountant had already maintained the PPE Ledger Cards (PPELC),
there is no detailed description of the property such as the brand, size, color, etc.
and the properties were just lumped per major account in the property ledger card
instead of maintaining different PPELC for each class of property. There was also
no data on the reference and quantity.

1.6. During the audit, the Barangay Treasurer informed the Audit Team that no Report
on Inventory of Property and Equipment (RIPE) has been prepared due to the
absence of an Inventory Team to conduct the physical count of barangay
properties and Property Custodian to maintain property records. Also, it was
disclosed that their equipment were not labeled with Property Tags, hence, some
procured equipment were difficult to trace.

1.7. This observation was consistently included in the Audit Report on Barangay
(ARB) Uguis since CY 2013 or for the past 10 years. The continued failure of the
barangay officials to implement the audit recommendations manifests a complete
disregard of the rules on property management and other relevant laws and
regulations. This is despite the seminar conducted by COA to all barangay
officials on the adoption of the Barangay Financial Management Manual wherein
the RIPE was first introduced.

1.8. The RIPE is intended to confirm the existence of the reported assets in the books
of the Barangay and validate whether these assets are within the vicinity of the
same or in its designated location. Without the RIPE, the amount in the books
cannot be substantiated while the existence of the properties cannot be confirmed.
Losses, damages or unserviceable properties will not be detected and the persons
liable for such losses may not be held accountable thereof.

1.9. Due to the above mentioned deficiencies, the accuracy, existence and reliability of
the PPE accounts cannot be confirmed which will affect the fair presentation of
the Barangay’s assets in its Financial Statements.

1.10. We recommend that the Punong Barangay should:

a. Create an Inventory Committee and instruct its members to conduct a

complete physical count of all properties of the barangay every year,
prepare and accomplish the Report on Inventory of Property and
Equipment completely when the physical count is concluded and
submit to COA and the Municipal Accountant;

1.11. We also recommend that the Barangay Treasurer as the Property Officer
Designate to:

a. Provide Property Tags for each equipment with complete labels;

AOM No. 2023-001 Brgy. Uguis, Mahaplag, Leyte Page 3 of 18
 b. Update the PAR of each employee every three years;
c. Provide adequate storage for Unserviceable Equipment;
d. Request for disposal of unserviceable properties, and
e. Maintain Property Cards for all properties of the Barangay

1.12. Also, we recommend that the Municipal Accountant should:

a. maintain and update the prescribed PPELC for each class of PPE
with complete details; and
b. provide the required depreciation of properties and submit the
detailed computation thereof to the Audit Team

1.13. Lastly, we recommend that the Barangay Treasurer as the Property Officer-
Designate and the Municipal Accountant should periodically reconcile their
respective records so as to establish a more reliable PPE balance.

Cash in Bank

2.0. The balance of Cash in Bank amounting to ₱1,282,215.09 is unreliable due to

non-preparation of monthly Bank Reconciliation Statements (BRS) contrary
to Section 111 (2) of Presidential Decree No. 1445 and Section 3.2 and 3.3 of
COA Circular 96-011.

2.0. Section 111 (2) of PD 1445 provides that the highest standards of honesty,
objectivity and consistency shall be observed in the keeping of accounts to
safeguard against inaccurate or misleading information.

2.1. Pertinent provision of COA Circular No. 96-011 dated October 2, 1996, provide:

Section 3.2 The Local Accountants shall within ten (10) days from
receipt of the Bank Statements (BS), reconcile the same BS with
the General Ledgers (GL) and prepare the BRS in five (5) copies.

Section 3.3 The accountant shall draw journal vouchers to record

all valid reconciling items that require adjustment and correction in
the GL.

2.2. The Financial Statements of the Barangay showed that the Cash in Bank-LCCA
has a total balance of ₱1,282,215.09 as of yearend. However, no Bank
Reconciliation Statements were prepared and submitted by the Municipal
Accountant for CY 2022.

AOM No. 2023-001 Brgy. Uguis, Mahaplag, Leyte Page 4 of 18

2.3. The failure to submit the BRS resulted to difficulty in ascertaining the accuracy
and correctness of the funds Cash in Bank Balance at yearend. Further, errors
committed by the bank cannot be promptly corrected.

2.4. We recommend that the Municipal Accountant submit explanation to the

Audit Team why Bank Reconciliation Statements were not prepared.

2.5. We also recommend that the Municipal Accountant prepare and submit the
BRS of the Barangay within 10 days from receipt of Bank Statements in
order to have a reliable Cash in Bank Balance.

Cash Local Treasury

3.0. The Cash - Local Treasury account was overstated by ₱38,222.08 due to
over/under recording of collections, non-recording of various deposits and
uncorrected unreconciled beginning balance between the cash examination
report and the general ledger, contrary to the provision of Section 111 of PD
1445 and Section 3.3 of COA Circular No. 96-011 dated October 2, 1996.

3.1. Section 111 (2) of PD 1445 provides that the highest standards of honesty,
objectivity and consistency shall be observed in the keeping of accounts to
safeguard against inaccurate or misleading information.

3.2. For CY 2022, the Barangay has Cash in Treasury account balance of ₱41,612.08
in its Financial Position. However, review on the submitted General Ledger and
Journals for CY 2022 versus the conduct of cash examination disclosed that the
balance should have been ₱3,390.00 as of December 31, 2022. The outstanding
balance was due to over/under recording of collections, over/under recording of
deposits and non-recording of deposits for CYs 2020 to 2022 and non-adjustment
of beginning balance of Cash in Treasury which should have been (₱80.00) , per
cash examination conducted last July 31, 2023. Details are shown in table 2.
Table 2. Corrections in the Cash in Treasury Account
Amount
Date Particulars Addition
(Deduction)
Under recording of collections, per ledger,
April 2020 2,700.00, per audit, 4,230.00 1,530.00
Under recording of collections, per ledger,
June 2020 1,870.00, per audit, 1,900.00 30.00
Dec 2020 Unrecorded deposit (640.00)

AOM No. 2023-001 Brgy. Uguis, Mahaplag, Leyte Page 5 of 18

 Amount
Date Particulars Addition
(Deduction)
Under recording of collections, per ledger,
May 2021 2,450.00, per audit, 3,100.00 650.00
May 2021 Unrecorded deposits (10,400.00)
Under recording of collections, per ledger,
Jannuary 2022 39,389.41, per audit, 39,389.49 0.08
Under recording of Deposits, per ledger
January 2022 1,700.00, per audit, 34,089.49 (32,389.49)
Under recording of collections, per ledger,
February 2022 11,400.00, per audit 11,500.00 100.00
Over recording of deposits, per ledger,
July 2022 4,450.00, per audit, 4,440.00 10.00
Uncorrected beginning balance for CY 2020
January 2020 Cash in Treasury , per ledger beginning
balance, (2,967.33), per audit (cash
examination report) , (80.00) 2,887.33
Total (38,222.08)

3.3. The amount of (₱80.00) should have been the beginning balance of Cash in
Treasury on January 2020 per the conduct of Cash Examination of the auditor on
July 31, 2023 as follows:

Table 3. Beginning balance of Cash in Treasury per Cash Examination.

Month Collections Deposits Balance
Balance last Cash Exam,
October 15, 2019 1,020.00
October 16-31, 2019 5,785.00 6,805.00 0.00
November 2019 720.00 720.00 0.00
December 2019 25,340.23 25,420.23 (80.00)

3.4. The non-adjustment of the above items amounting ₱38,222.08 resulted in an

overstatement of Cash in Treasury as of year-end by the same amount.

3.5. We recommend the Barangay Bookkeeper to prepare Journal Entry

Vouchers to record the above items so as to come up with the correct Cash –
Local Treasury account balance.

AOM No. 2023-001 Brgy. Uguis, Mahaplag, Leyte Page 6 of 18

Lacking Details or Supporting Documents for Distribution of Relief/Welfare Goods

4.0. The reports on the distribution of various relief goods with an aggregate
amount of ₱243,850.00 to the families/household affected by calamities were
not properly documented, while the related expense were erroneously
recorded as Food Supplies Expense instead of Welfare Goods for Distribution
upon initial recording and Welfare Goods Expense upon distribution,
contrary to Sections 2 and 4 of Presidential Decree (P.D.) No. 1445 and COA
Circular No. 2015-009 dated December 1, 2015, , thus, the propriety of the
program could not be ascertained while the accounts Welfare Goods Expense
and Food Supplies Expense were misstated as at year end.

4.1. Section 2 of P.D. 1445 states that:

“It is the declared policy of the State that all resources of the
government shall be managed, expended or utilized in accordance
with law and regulations, and safeguard against loss or wastage
through illegal or improper disposition, with a view to ensuring
efficiency, economy and effectiveness in the operations of
government. The responsibility to take care that such policy is
faithfully adhered to rests directly with the chief or head of the
government agency concerned.”

4.2. While Section 4 of P.D. 1445 provides, that financial transactions and operations
of any government agency shall be governed by certain fundamental principles.
Paragraph 6, thereof, states that claims against government funds shall be
supported with complete documentation.

4.3. Moreover, COA Circular No. 2015-009 dated December 1, 2015 prescribed the
Revised Chart of Accounts for LGUs to conform with the adoption of the Phil.
Public Sector Accounting Standard (PPSAS). On recording of expenses, the
following accounts were prescribed to be used by LGUs:

Welfare Goods for Distribution

1-04-02-020
Debit

This account is used to record the cost of goods for distribution to people affected
by calamities/disasters/ground conflicts such as canned goods, blankets, mats,
kitchen utensils, flashlights and other similar items. Credit this account for
issuance to end-users, transfers or write-down.
Welfare Goods Expenses
5-02-03-060
Debit

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 This account is used to record the cost of goods issued/distributed to people
affected by calamities/disasters/ground conflicts such as canned goods, blankets,
mats, kitchen utensils, flashlights and other similar items. This also includes the
cost of food served to people affected by calamities/disasters/ground conflicts.
Food Supplies Expense
5-02-03-050
Debit

This account is used to record the cost of food issued to hospital/rehabilitation

patients, jail inmates and the like.

4.4. Audit of disbursements in CY 2019-2022 disclosed that the Barangay procured a

total of ₱243,850.00 goods for distribution. Details on the purchase of various
relief goods in response to calamities charged to the Local Disaster Risk
Reduction Management Fund are as follows:

Table 4. Food Items and Other Relief Goods

Gross
Date Check No. Particulars Amount
With Distribution List
(20 sacks rice, 5 boxes 28,40
3/20/2020 483169 sardines) 0.00
Goods for Covid-19 (25
sacks rice, 15 boxes 89,20
3/30/2020 483174 sardines, 5 boxes noodles) 0.00
subtotal with distribution list 117,600.00
Without Distribution list
Goods (25 sacks rice, 13
box noodles, 7 box sardines, 77,60
12/20/2021 576012 78 dozen coffee) 0.00
goods and can goods (13
sacks rice, 6 box noodles, 5 48,65
12/20/2022 610764 box canned goods ) 0.00
subtotal without distribution list 126,250.00
Total 243,850.00

4.5. Perusal of the submitted documents related to the distribution of the purchased
relief goods revealed that no distribution reports was submitted for the
procurement totaling ₱ 117,600.00 while the distribution reports submitted for
the procured goods totaling ₱126,250.00 do not contain information as to the
quantity of such goods received by the affected beneficiaries.

AOM No. 2023-001 Brgy. Uguis, Mahaplag, Leyte Page 8 of 18

4.6. Moreover, it was also disclosed that the issuances of the above transactions were
erroneously recorded as Food Supplies Expense instead of Welfare Goods for
Distribution upon initial recording and Welfare Goods Expense upon distribution.

4.7. The improper documentation on the distribution of the relief goods casts doubts
on the regularity and even existence of the program which aims to provide relief
of the affected families, while the erroneous entry of expense resulted in an
overstatement of Food Supplies Expense by ₱243,850.00 and an understatement
of the Welfare Goods Expense by the same amount.

4.8. We recommend that the Punong Barangay submit the reports on the
distribution of relief goods with complete details such as the name of the
beneficiary, signature and the items and quantity received.

4.9. We also recommend the Bookkeeper to record issuances of relief goods not as
Food Supplies Expense but as Welfare Goods Expense.

Non-disclosure of LDRRMF to the Notes to FS

5.0. There was no disclosure in the Notes to Financial Statements pertaining to

the amount and details of the unexpended balance of Local Disaster Risk
Reduction Management Fund (LDRRMF) amounting ₱138,276.75, contrary
to COA Circular No. 2012-002 dated September 12, 2012, thus additional
information value to the financial statements was not provided.

5.1. COA Circular 2012-002 dated September 12, 2012 was issued to prescribe
accounting and reporting guidelines for the LDRRMF of LGUs (including
BLGUs) and NDRRMF given to LGUs and Receipts from other sources.

5.2. Whereas, Section 5.1.16 of the same Circular states “The amount and details of
the unexpended balance of LDRRMF shall be discussed in the Notes to Financial
Statements”. A sample of disclosure was attached as Annex D of the same
circular as shown below:

Annex D
Notes to the Financial Statements

Note____. Local Disaster Risk Reduction Management Fund (LDRRMF)

The LDRRMF represents the amount set aside by the LGU to support its
disaster risk management activities pursuant to R.A No.10121, otherwise known
as the Philippine Disaster Risk Reduction and Management Act of 2010.The

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 amount available and utilized during the year totaled ₱_________ and
₱_________ , respectively, broken down as follows:

5.3. Verification of amounts presented in the Annual Budget and Supplemental

Budgets prepared for Calendar Years 2019 to 2022 disclosed that the barangay
appropriated a total amount of ₱417,989.25 as 5% LDRRMF. Moreover, the
report showing the balances and list of utilizations made in CYs 2019-2022,
signed by the Barangay Bookkeeper and certified correct by the Municipal
Accountant, states that the utilizations of the fund totaled ₱279,712.50, while
continuing balance of the 5% BDRRMF balance as of December 31, 2018 had
zero balance. Details are shown in Table 5.
Table 5. BDRRMF balance
Amount
Particular
CY 2019 CY 2020 CY 2021 CY 2022 Total

Beginning Balance 36,071.00 64,555.96 87,933.75

Current Appropriation 83,071.00 94,947.46 100,977.79 138,993.00 417,989.25

Utilization 47,000.00 66,462.50 77,600.00 88,650.00 279,712.50

Balance as of Year
end 36,071.00 64,555.96 87,933.75 138,276.75

5.4. As can be seen in Table 5, the Barangay Local Government Unit of Tagaytay,
Mahaplag, Leyte has still a significant amount of BDDRMF balance of
₱138,276.75 as of December 31, 2022. However, review of the Notes to
Financial Statements disclosed that the amount and details of the unexpended
balance of LDRRMF were not discussed.

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5.5. The Notes failed to disclose the amount available, utilized and balances during the
four- year period under audit, CYs 2019, 2020, 2021, and 2022. The balance
should have been discussed in a detailed manner so as to give additional value to
the financial statements.

5.6. We recommend that the Municipal Accountant disclose in the succeeding

Notes to Financial Statements the details of the unexpended balance of the
BDRRMF using the format provided in COA Circular No. 2012-002 dated
September 12, 2012.

Utilization of BDRRMF

6.0. Disbursements from CY 2019 to CY 2022 amounting to ₱279,712.50 were

paid from BDRRM Fund despite the non-preparation and non-submission of
the LDRRMF Investment Plan by the BDRRMO, contrary to Sections 5.1.2
and 5.1.3.2 of COA Circular No. 2012-002 which resulted to irregular
expenditures.

6.2. Section 5.1.2 of COA Circular 2012-002 states that, a Local Disaster Risk
Reduction and Management Fund Investment Plan (LDRRMFIP) for the DRRM
program shall be prepared annually. It shall present the 30% allocation for QRF in
lump sum and the allocation for disaster mitigation, prevention and preparedness
with details as to projects and activities to be funded. The LDRRMFIP shall also
include under a separate caption, the list of projects and activities charged to the
unexpended LDRRMF of previous years.

6.3. Section 5.1.3.2 of the same circular states that the release and use of LDRRMF
shall be supported by LDRRMFIP for projects and activities listed in the
approved plan as incorporated in the local development plan and annual work
and financial plan.

6.4. For CY 2019-2022, the Barangay has a total appropriation of ₱417,989.25 (see
details in table 5, finding no. 5) for its BDRRMF including previous years
balance. It was, however, noted that a Work and Financial Plan was prepared
annually and not the prescribed BDRRMFIP. The said document lacks
information on the Functional Classification (Gen. Public Services, Health,
H o u s i n g , Community Development); Schedule of Implementation (Starting
Date & Completion Date); Amount of Appropriation and classification whether
MOOE or Capital Outlay.

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6.5. Despite the absence of a duly approved BDRRMFIP, disbursements totaling
₱279,712.50 were incurred and paid from the BDRRMF. Details of the
disbursements are shown in Table 6.

Table 6. Disbursements charged to LDRRMF

Date Check No. Particulars Gross Amount
11/27/2019 483126 Communication Equipment 47,000.00
Purchase 15 units
12/15/2020 545768 Emergency Light 31,462.50
Purchase of Emergency
Equipments (boots, shovel,
flashlight, raincoat and
12/28/2020 545769 rubber gloves) 35,000.00
Goods (25 sacks rice, 13 box
noodles, 7 box sardines, 78
12/20/2021 576012 dozen coffee) 77,600.00
12/20/2022 610763 Fire extinguisher 40,000.00
goods and can goods (13
sacks rice, 6 box noodles, 5
12/20/2022 610764 box canned goods ) 48,650.00
Total 279,712.50

6.6. Without an approved LDRRMFIP, the Chairman Committee on Appropriation

had no basis for certifying the existence of available appropriations authorized for
the purpose. Thus, disbursements charged against LDRRMFIP were irregular. In
addition, the absence of an approved plan denotes that the procured items and
other activities were not approved by the other members of the LDRRM council
and based only on arbitrary decision of the requesting officials.

6.7. We recommend that the BDRRMO, through the Punong Barangay, convene
the LDRRM Council and prepare the LDRRMFIP which also includes PPAs
to be paid from previous years unexpended DRRMF annually as basis for
the use of the LDRRMF based on the priority programs, projects and
activities included in COA Circular 2012-002.

6.8. We also recommend that the Punong Barangay, the Chairman Committee on
Appropriation, and the Barangay Treasurer stop processing disbursements
from LDRRMF without the approved LDRRMFIP.

Lack of Appropriation for LCPC

7.0. No funds were appropriated in the CY 2019 to 2022 budget of the barangay
for the implementation of programs, projects and activities for the protection
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 of children, contrary to Republic Act No. 9344, thus protection of children’s
rights within the barangay is not strengthened.

7.1. Republic Act No. 9344 (Juvenile Justice and Welfare Act of 2006) adopts as a
policy the protection of the interests of children and promotes their physical,
moral, spiritual, intellectual and social well-being. The Act also recognizes the
rights of children to assistance, proper care and nutrition and special protection
from all forms of neglect, abuse, cruelty and exploitation, and other conditions
prejudicial to their development.

7.2. Section 15 of the said Act mandates the creation of Local Councils for the
Protection of Children (LCPC) in all levels of local government. It provides
further that 1% of the internal revenue allotment (IRA) of barangays,
municipalities and cities, shall be allocated for the strengthening and
implementation of the LCPC.

7.3. Our perusal of the Annual Budget of the barangay disclosed that no funds were
appropriated for the implementation of programs, projects and activities (PPA)
intended for the Council for the protection and well-being of children although the
barangay has established and created their own LCPC. Based on the estimated
IRA for the noted budget years, the following could have been appropriated for
LCPC programs and activities:

Table 7. Available Funds for LCPC

CY 2022 CY 2021 CY 2020 CY 2019
Estimated IRA 2,739,462.00 1,998,471.00 1,868,169.00 1,642,563.00
SHOULD BE - 1% of IRA 27,394.62 19,984.71 18,681.69 16,425.63
ACTUAL Appropriation - - - -
Lacking Appropriation 27,394.62 19,984.71 18,681.69 16,425.63

7.4. Without the necessary budget and plan, the rights, interest and well-being of the
children in the barangay will not be protected, established and strengthened.

7.5. We recommend that the Punong Barangay include in its annual budget an
appropriation equivalent to 1% of its IRA intended for the protection and
welfare of the children in the barangay, identify and implement the
programs, projects and activities using the said fund pursuant to RA 9344.

1% Allocation for Senior Citizen and PWD

8.0. No funds were appropriated for programs and projects for Senior Citizens
and Persons with Disabilities (PWD) in CY 2019 to 2022 which should be 1%
of the barangay’s IRA, contrary to DBM and DSWD Joint Circular No.
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 2003-01 dated April 28, 2003, thus depriving the elderly citizens in the
barangay the full benefits of the programs due them.

8.1. DBM-DSWD Joint Circular No. 2003-001 dated April 28, 2003 was issued to
prescribe guidelines for the implementation of Section 29 of the General
Appropriations Act of 2003 which states that the plans, programs and projects
intended to address the concerns of senior citizens and persons with disability
shall be integrated in the regular activities of the agencies. Sections 4.2 and 4.3
thereof directs all government agencies, departments, bureaus, offices,
commissions and state universities and colleges to allocate at least one percent
(1%) of their respective budget to be utilized in the implementation of
programs/projects/activities/services which will address the needs of older persons
and persons with disabilities (PWDs).

8.2. Our perusal of the Annual Budgets of the barangay disclosed that no funds were
appropriated for Senior Citizens and PWDs programs and activities for the
periods CY 2019, CY 2020, 2021 & CY 2022 as shown in Table 8.

Table 8. Fund for Senior Citizens and PWDs Programs/Projects

CY 2022 CY 2021 CY 2020 CY 2019
Estimated IRA 2,739,462.00 1,998,471.00 1,868,169.00 1,642,563.00
SHOULD BE - 1% of IRA 27,394.62 19,984.71 18,681.69 16,425.63
ACTUAL Appropriation - - - -
Lacking Appropriation 27,394.62 19,984.71 18,681.69 16,425.63

8.3. Without the necessary appropriation sanctioned by law, the elderly citizens and
PWDs of the barangay are deprived of the benefits of the programs, which could
have been financed from the said amount.

8.4. We recommend that the Punong Barangay and its Council appropriate funds
in its annual budget for programs and projects benefitting Senior Citizens
and Persons with Disabilities (PWDs) at an amount of no less than 1% of the
annual IRA as required by the Expanded Senior Citizen Act, R.A. No. 9994.

Release of 10% SK Fund share

9. Release of 10% Sangguniang Kabataan share totaling ₱784,804.34 were not

made within the prescribed period and were not supported by Official
Receipts issued by the Sangguniang Kabataan Treasurer while shares
totaling ₱41,716.06 were still not released to the SK contrary to Sections 3.8
and 5.1.4 of the Handbook on the Financial Transactions of the Sangguniang
Kabataan(HFTSK) and Section 4.6 of Presidential Decree (P.D.)No. 1445,
thus, funds intended for SK may be used by the barangay for other purposes
and was not properly documented.
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9.1. Section 3.8 of the Handbook on the Financial Transactions of the Sangguniang
Kabataan provides that revenue generated from sources expressly authorized
under RA No. 10742 and collections thereof shall at all times be acknowledged
properly by issuing an Official Receipt (OR). Revenue collected by the SK
through direct deposit to the SK’s bank account shall be supported with a copy of
Validated Deposit Slip (VDS)/Credit Memo (CM) in lieu of OR.

9.2. Moreover, section 5.1.4 of the same handbook provides that upon receipt of the
monthly internal revenue allotment (IRA) of the barangay, the Punong Barangay
shall automatically release not later than five (5) working days without further
delay the share of the SK equivalent to ten percent of the general fund of the
barangay by issuing check in the name of the SK for deposit to the latter’s bank
account.

9.3. In addition, section 4.6 of P.D.1445 states that Claims against government funds
shall be supported with complete documentation.

9.4. For CY 2019-2022, the Barangay has released a total of ₱784,804.34.00 of the
10% SK share. However, as of to date, shares totaling ₱41,716.06 were still not
released to the SK as required by the Department of Budget and Management
(DBM), Department of the Interior and Local Government (DILG) and National
Youth Commission (NYC) Joint Memorandum Circular (JMC) No. 1, s. 2019
dated January 23, 2019). Details is shown in tables 9 and 10.

Table 9. Release of 10% SK share

Year Date Check No. Particulars Amount
11/7/2019 482124 Open Account 10,600.00
2019 11/7/2019 482127 10% SK Shares 144,042.00
Subtotal 2019 154,642.00
5/14/2020 483193 10% SK Shares 79,112.50
2020
10/9/2020 545726 10% SK Shares 79,125.00
12/8/2020 545759 42,472.00
Subtotal 2020 200,709.50
2021 12/14/2021 545900 10% SK Shares 151,466.84
Subtotal 2021 151,466.84
5/6/2022 576084 10% SK Shares 115,827.50
2022
11/7/2022 610744 10% SK Shares 162,158.50
Subtotal 2022 277,986.00
Total 784,804.34

AOM No. 2023-001 Brgy. Uguis, Mahaplag, Leyte Page 15 of 18

Table 10. Unreleased 10% SK Shares
No.
Monthly 10 %SK TOTAL SK
Yea of Released Unreleased
IRA Share 10 % share
r Mos. SK Shares SK Shares
(a) ( b) (bxc)
©
2019 138,379.00 13,837.90 12 166,054.80 154,642.00 11,412.80
2020 155,570.00 15,557.00 12 186,684.00 200,709.50 - 14,025.50
2021 166,529.00 16,652.90 12 199,834.80 151,466.84 48,367.96
2022 228,289.00 22,828.90 12 273,946.80 277,986.00 - 4,039.20
Total 826,520.40 784,804.34 41,716.06

9.5. Moreover, it was disclosed that though the barangay has released some of the SK
shares for 2019 and 2021, it was not made monthly or within the prescribed
period which is not later than five (5) working days upon receipt of the monthly
internal revenue allotment (IRA) of the barangay as it were released in lump sum
as can be seen in table 9.

9.6. Furthermore, the said releases were not supported with Official Receipts issued by
the Sangguniang Kabataan Treasurer. In an interview with the Municipal
Accountant, the SK officials may not still be aware that their receipts of 10%
shares should be supported with official receipts and that they are yet to attended
the seminar on the Handbook on the Financial Transactions of the Sangguniang
Kabataan conducted by the Commission in which such policy is one of the
highlights to be discussed.

9.7. The delayed and non-release of SK shares exposes the risk of the fund being used
for other purposes while the Official Receipts issued by the SK Treasurer would
have supported the disbursements made by the barangay as proof of receipt by the
SK.

9.8. We recommend that the Barangay release the unreleased SK shares totaling
₱41,716.06 and ask for Official Receipt from SK Treasurer as their proof of
receipt and for future SK shares to be automatically released not later than
five (5) working days without further delay upon receipt of the monthly IRA
of the barangay.

9.9. We further recommend that the Barangay Treasurer demand the SK

Treasurer for the issuance of Official Receipts of the above releases and
submit the same to the audit Team.

May we have your comments on the foregoing audit observations within five (5)
calendar days from receipt hereof.
AOM No. 2023-001 Brgy. Uguis, Mahaplag, Leyte Page 16 of 18
 MA. SHIELA T. ELMIDO
State Auditor II
OIC- Audit Team Leader

SANTIAGO P. SEÑASE
State Auditor IV
OIC-Supervising Auditor

Proof of Receipt of AOM:

Date
Officer Name of Receiving Officer Signature
Received
Punong Barangay
Barangay Treasurer
Municipal Accountant

AOM No. 2023-001 Brgy. Uguis, Mahaplag, Leyte Page 17 of 18